The FTSE 100 opened slightly higher this morning, building on yesterday’s modest gain as it works to recover from a sluggish start to the week. Retail remains in focus after recent downgrades and warnings on consumer demand, but a rise in the energy price cap from October gave utilities a boost in yesterday’s session.
The main story capturing attention comes from the biggest company in the world, as Nvidia released its latest results last night. Shares have held onto overnight losses, despite an upbeat earnings call, as the absence of China sales in guidance surprised investors. Remarkably, revenue still surged at an unprecedented pace without contributions from one of its key markets, while management struck a confident tone on demand for AI chips and the scaling of Blackwell and Blackwell Ultra. If licensing issues are resolved, China could add $2–5 billion to Q3 revenue on top of the $54 billion guidance. Apples to apples, this guide was a good clip ahead of consensus, which had built in a few billion dollars’ worth of Chinese sales, leaving plenty of room for positive upside over the coming months.
Smart investors will look through the noise. Nvidia has a history of soft trading on earnings day, only to do all the heavy lifting after markets have had time to digest the results. The law of large numbers seems irrelevant here – despite its scale, Nvidia continues to defy expectations as consensus underestimates the opportunity at hand.
US stocks edged higher yesterday, but the mood was more about waiting than celebrating as investors held out for Nvidia’s blockbuster report. That patience didn’t quite pay off, as results landed strong but lacked a knockout blow, and futures now point to a pullback as Nvidia’s heavy weight drags on major Indices.
Brent crude oil slipped back toward $67 as traders weighed softer US fuel demand as the summer driving season winds down. A bigger-than-expected draw in US stockpiles offered some support, but analysts warn consumption typically eases after ‘Labor Day’. Geopolitical tensions and hopes for a US rate cut helped limit losses, while attention stayed on India’s response to new tariffs aimed at curbing its Russian oil trade.
By Matt Britzman, senior equity analyst, Hargreaves Lansdown.
